DTN Early Word Opening Livestock

Hog Futures Geared For Firm Opening

John Harrington
By  John Harrington , DTN Livestock Analyst
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(DTN file photo)

Cattle: Steady-$2 HR Futures: Mixed Live Equiv $133.43 + .34*

Hogs: Steady-$1 HR Futures: 50-100 HR Lean Equiv $ 80.37 + .81**

* based on formula estimating live cattle equivalent of gross packer revenue

** based on formula estimating lean hog equivalent of gross packer revenue

GENERAL COMMENTS:

The cash cattle market should be a typical yawner for a Tuesday with bids and asking prices poorly defined. We expect cattle to eventually be priced higher given recent momentum. Yet little may be said by either side until Thursday or Friday. CME officials reported Monday afternoon that 34 loads were retendered against spot October live cattle (16 for $1; 18 for $2), all at West Point. The 18 loads discounted for $2 were all reclaimed. Live and feeder futures are expected to open on a mixed basis thanks to spillover selling and short-covering.

The cash hog trade should continue to sport a firm undertone Tuesday morning. Producers are really benefitting from fairly aggressive competition among profit-hungry packers, both old and new. But how long will such cash support last? Weekly kills probably remain 100,000 below the quarterly high. Lean futures should open moderately higher, supported by follow-through buying and encouraging fundamentals.

BULL SIDE BEAR SIDE
1) Feedlot managers distributed generally smaller showlists to start the week with only Kansas showing fewer ready steers and heifers. 1)

Despite last week's show of cash cattle strength, spot October live fell sharply lower Monday. Is the board tired of leaning cash higher? Are CME bulls worried that feedlot cash running out of gas?

2) Although beef processing margins have tightened some this month, carcass value continues to do a decent job in keeping up with the rising cost of live inventory. Beef cutouts closed moderately higher on Monday with respectable early-week box movement. 2) While the last several weeks have hosted a corrective rally in both cash and futures, the long-term hog market trend remains negative as is the structure of the market.
3) The pork carcass value closed solidly higher on Monday, supported by better demand for loins, ribs and hams. 3) Given that most analysts believe fourth quarter pork production will exceed 2016 by 4% to 5%, the additional tonnage (300 million to 350 million pounds) would require a 20% increase in the record exports of October to December 2016. That seems unlikely.
4) It appears that weekly hog slaughter has at least momentarily topped out around 2.5 million head (this week's total will be close to that once again). That news is supportive of the cash trade given strong processing margins. 4) Although pork processing margins remain decent, packer profit potential took a big hit last week. If that slide continues, plants could react by slowing chain speed.

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OTHER MARKET SENSITIVE NEWS

CATTLE:(capitalpress.com) -- An Eastern Washington feedyard operator is a new spokesman for the beef industry.

Cody Easterday, owner of Easterday Ranches in Pasco, is featured as part of the relaunch of the national "Beef-- It's What's For Dinner" advertising campaign, funded by the National Beef Checkoff.

"I just think it's a good idea to tell our story," Easterday told the Capital Press. "Ranchers are doing a fantastic job raising high-quality beef for the consumer, and I don't think everybody knows it. It's a great idea to tell the world what we're doing."

Easterday said he wants consumers to feel comfortable with the idea that technology in food production is a good thing.

"By using technology, we're not only producing a safer product with less environmental impact, we're also producing more of it at a lower cost for the consumer," he said.

Easterday worked with the Washington Beef Commission during its annual Explore Beef Experience tour program. National staff recognized Easterday as a leader in the cattle feeding business, said Patti Brumbach, executive director of the Washington commission.

The national campaign seeks to represent ranchers throughout the country, Brumbach said, calling Easterday a "natural fit."

Easterday works to produce cattle in a way that has less impact on the environment and take care of the animals, she said.

Part of Easterday's message is the industry is continually improving, Brumbach said.

"The way that they care for the animals and for the environment," she said. "Letting them see video of pen riders taking care of the cattle, let them see the veterinarians that consult with them and what it means to make sure they're comfortable, healthy and well-fed."

The social media campaign began this month. Brumbach said it taps into consumers' nostalgia for the original "Beef-- It's What's For Dinner" campaign as something they fondly remember from their childhood.

HOGS: (Penton Business Media) -- Following his recent visit to the United States, Thailand's prime minister last week asked the country's agriculture ministry to study the impact of allowing U.S. pork imports, according to a story in the Bangkok Post.

Despite an overwhelming body of scientific evidence that demonstrates the safety of ractopamine, Thailand since 2007 has denied market access for U.S. pork based on an unscientific, zero-tolerance policy for this feed additive. Ractopamine has been determined to be safe by the U.S. Food and Drug Administration and is approved for use in pork production in 26 countries, with 75 additional countries allowing the import of pork from ractopamine-fed hogs even though it is not fed in their domestic herds.

In July 2012, the United Nation's Codex Alimentarius Commission, which sets international standards for food safety, approved a maximum residue limit for ractopamine, which U.S. pork meets. The National Pork Producer Council continues to advocate for the removal Thailand's ban on U.S. pork raised with ractopamine

John Harrington can be reached at feelofthemarket@yahoo.com

Follow John Harrington on Twitter @feelofthemarket

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John Harrington

John Harrington
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